| The Board decides on matters that require its approval and clearly communicates this to Management in writing. Matters requiring Board approval are disclosed in the company’s annual report. |
A. Explanation
This Provision covers matters that are reserved for the Board.
The Board may delegate the normal business operations and day-to-day running of the company to management. However, certain matters require its specific approval, such as:
- Annual plans, risk appetite and performance targets for the company.
- The establishment of effective procedures to monitor and control operations including internal audit, risk and compliance procedures.
- The authority or the delegation of authority to approve an acquisition, disposal, investment, capital expenditure or realisation or creation of a new venture.
The Board should decide which matters it needs to approve. For clarity and to ensure conformance, the Board should formally inform management of these “Board Reserved Matters” in writing.
A leading approach to documenting the approval of authorities and/or limits is to establish a formal Authority Grid, which clearly delineates the participation types and approval limits of the CEO, Board Chairman, Board Committees, and the full Board.
The Provision states that all matters reserved for the Board are disclosed in the annual report.
B. Practice Guidance
C. Related Rules and Regulations
- Nil.
D. CG Guides
- Board Guide 2.2: Authority [Board Composition].
- Board Guide Appendix 2C: Board Powers and Delegation [Board Composition].
- Board Guide Appendix 6G: Authority Grid [Board Relationships]
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